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IBJ: George injury will cost Pacers plenty of money

If rising star Paul George is lost for the entire 2014-2015 season, his absence will likely trigger an eight-figure loss for the Indiana Pacers.

Part of that loss will be determined by how local basketball fans—and corporate sponsors—respond to the loss of George and the resulting on-court fortunes of the Pacers.

Financially, the Pacers’ blow should be cushioned by an insurance policy which will cover part of George’s salary. He is owed $15,937,290 for next season. George’s contract with the Pacers is guaranteed, meaning he gets it whether he can play or not.

NBA bylaws stipulate that every team has to pay for insurance for their five highest-paid players, if offered by the league insurance policy issuer, MetLife.

That doesn’t mean the Pacers are off the hook if George is out all of next season.

According to the collective bargaining agreement hashed out by the NBA Players Association and team owners, the MetLife insurance policy takes effect after a 41-game deductible. That means the Pacers are on the hook for the first $7,968,645. But that’s not all.

After that, MetLife will pay 80 percent of George’s salary while he’s recovering from his injury. That means the Pacers will cover the other 20 percent, or another $1,593,729 of his remaining salary for the 2014-2015 season. The Pacers will pay $9,562,374 for a player that likely won’t play a game.

And, NBA officials said, George’s entire salary will count against the salary cap—even if he doesn’t play a single game. The NBA has a soft salary cap, meaning teams can exceed that cap under certain circumstances. There’s a luxury tax for teams that exceed the cap by about $14 million or more, but the Pacers are never going to do that.

The collective bargaining agreement does have a disabled player exception that is more than a little complicated. It will allow the Pacers to replace the injured George with another player. There are a number of governing parameters per the collective bargaining agreement.

In any event, adding a player to the roster to replace George could cost the Pacers another $8 million next season.

Pacers owner Herb Simon has been adamant in the past that the franchise will remain fiscally conservative when it comes to exceeding the salary cap. He’s been clear that he has zero intention of paying a luxury tax.

If the Pacers are going to compete for a playoff spot in the NBA's Eastern Conference this upcoming season, Simon’s fiscal restraint may have to loosen.

Here’s what’s even less clear than all that. How will Pacers fans respond to George’s injury?

Indianapolis is not exactly known for its die-hard sports fan base. Basically, the fans’ rule here seems to be ‘win and we’re in, lose and we’re outta here.’

Some call Indy a bandwagon town.

There have been exceptions to that, of course. Pacers fans rallied behind the team immediately after the 2004 brawl in Detroit. But when the Pacers faltered in subsequent years, the team’s attendance sunk to the lowest in the NBA.

When the Colts have faltered, fans stayed away too. Most recently, when the Colts lost quarterback Peyton Manning for the entire 2011 season and his long-term prospects here looked dubious, the team’s season ticket renewal and waiting list shrunk dramatically.

Pacers’ attendance has been on a big upward trend the last three years—as the team has excelled on the court. Last year, the Pacers averaged 17,501 for 41 home games, and season ticket renewal for the upcoming season is well over 90 percent. Season-ticket sales as of mid-June were running 15 percent ahead of where they were a year ago, according to Pacers officials.

Simon was pushing Pacers sales boss Todd Taylor and his staff to sell out the 18,165-seat Bankers Life Fieldhouse for every home game this season. While Taylor told IBJ in June that was a tall task, he didn’t discount the possibility.

But a lot has changed since then. Last month, starter Lance Stephenson left the Pacers for what he considered a better contract in Charlotte. Then George went down on Friday with a broken leg. Many speculate he’ll miss all—or at the very least the vast majority—of the upcoming season.

The Pacers have gone from a team that was projected to be second or third best in the Eastern Conference to one that will be fighting for a playoff spot.

While many Pacers fans are upset that basketball operations chief Larry Bird let Stephenson get away, they can hardly blame him—or anyone else within the organization—for what happened to George.

Either way, an attendance decline of 1,000 to 1,500 per home game would cost the Pacers another $1.5 million to $2 million in ticket revenue alone. Including parking, concession and merchandise sales that those fans would contribute and the financial hit could exceed $3 million.

As the Pacers attendance has risen, so has the team’s sponsorship revenue. Sponsorship sales increased 10 percent last season from the year previous, and in June Taylor said they were trending in that same direction for the upcoming season. Again, that was before the Stephenson departure and George injury.

It’s unclear how sponsors will respond, but it’s safe to say fewer fans in the stands won’t help sell any new sponsorships. It wouldn’t be a stretch to say the Pacers could lose another $1 million in lost sponsorship sales opportunities.

Factor in what they’re paying to bring in another player and the loss could easily exceed $12 million.
Pacers officials remain upbeat.
"Season-ticket holders, sponsors and fans in general have responded in an overwhelmingly positive tone since the (Paul George) injury. We believe the community will rally behind the team Larry Bird has put together," said Pacers spokesman Bill Benner.

For the team and its fans, however, putting a price on the lost opportunity the upcoming season could represent is impossible.

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Re: IBJ: George injury will cost Pacers plenty of money

No way were we paying luxury tax in the first place, but this makes it doubly clear, in case you doubted it even a little.

The poster "pacertom" since this forum began (and before!). I changed my name here to "Slick Pinkham" in honor of the imaginary player That Bobby "Slick" Leonard picked late in the 1971 ABA draft (true story!)

Re: IBJ: George injury will cost Pacers plenty of money

If Simon wants to sell out the Fieldhouse for every game, he's going to have to go into the luxury tax at some point. It's not going to happen without a luxury tax team.

The swing from collecting tax money to paying tax money would be greater than the amount lost to attendance.

Say you paid 3 million in luxury tax and didn't collect the 1.5 million dollar check that each non-tax-paying team got last year. You'd be 4.5 million worse off. The article puts ticket sale, parking, concession losses at max 3 million.

The poster "pacertom" since this forum began (and before!). I changed my name here to "Slick Pinkham" in honor of the imaginary player That Bobby "Slick" Leonard picked late in the 1971 ABA draft (true story!)

Re: IBJ: George injury will cost Pacers plenty of money

If Simon wants to sell out the Fieldhouse for every game, he's going to have to go into the luxury tax at some point. It's not going to happen without a luxury tax team.

We had something like 24 sellouts last year without being in the LT. Sure, it isn't likely to happen this year given the PG injury, but there's nothing at all that says they have to be paying salaries that put them into the LT in order to get sellouts.

BillS

A bird in the hand is worth two in the bush.
Or throw in a first-round pick and flip it for a max-level point guard...

Re: IBJ: George injury will cost Pacers plenty of money

I don't think things will get as bad as they were four years ago. There's a good chance that PG will come back at or near 100% next year, so this should just be a temporary setback not unlike the Colts a couple years ago.

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Re: IBJ: George injury will cost Pacers plenty of money

And this is why the NBA should set up their own World Cup tournament. Paul didn't get hurt playing for Herb, but Herb is taking all the financial hit from PG's 100% preventable injury while USA Basketball and their ****** goalpost placing just walks away without a care in the world.

"Nobody wants to play against Tyler Hansbrough NO BODY!" ~ Frank Vogel

"And David put his hand in the bag and took out a stone and slung it. And it struck the Philistine on the head and he fell to the ground. Amen. "
Want your own "Just Say No to Kamen" from @mkroeger pic? http://twitpic.com/a3hmca

Re: IBJ: George injury will cost Pacers plenty of money

The swing from collecting tax money to paying tax money would be greater than the amount lost to attendance.

Say you paid 3 million in luxury tax and didn't collect the 1.5 million dollar check that each non-tax-paying team got last year. You'd be 4.5 million worse off. The article puts ticket sale, parking, concession losses at max 3 million.

Re: IBJ: George injury will cost Pacers plenty of money

Agreed. Isn't the big thing these days television contracts and not necessarily butts in the seats?

butts in the seats has a not-insignificant effect on TV viewing. Tuning into a game in an empty arena is a negative factor for a casual fan who equates "no one there" to "bad". Not hearing noise in the background equates to "bad".

The $ for in-arena sponsors is based a lot on how many butts in the seats will see them (and how many people on TV will see them when there are shots of the crowd, which there won't be in an empty arena).

And, finally, for this market I can pretty much guarantee you the total TV $ don't come close to the ticket money for a sold-out arena when tickets don't have to be discounted heavily or given away.

We're not going to see arenas built to hold fewer people while depending on TV revenue for the biggest support any time soon.

BillS

A bird in the hand is worth two in the bush.
Or throw in a first-round pick and flip it for a max-level point guard...

The poster "pacertom" since this forum began (and before!). I changed my name here to "Slick Pinkham" in honor of the imaginary player That Bobby "Slick" Leonard picked late in the 1971 ABA draft (true story!)

Re: IBJ: George injury will cost Pacers plenty of money

And this is why the NBA should set up their own World Cup tournament. Paul didn't get hurt playing for Herb, but Herb is taking all the financial hit from PG's 100% preventable injury while USA Basketball and their ****** goalpost placing just walks away without a care in the world.

Why should I care? Herb doesn't own Paul George. Paul George is his own person who can make his own decisions, and Herb is a billionaire. I really don't care if he looses a few million because he decided to own a NBA team with full knowledge that his players could easily injure themselves at any moment completely unrelated to their duties with the NBA.

Would you like it if your employer made it so you couldn't do anything semi-dangerous in your free time?

Re: IBJ: George injury will cost Pacers plenty of money

And this is why the NBA should set up their own World Cup tournament. Paul didn't get hurt playing for Herb, but Herb is taking all the financial hit from PG's 100% preventable injury while USA Basketball and their ****** goalpost placing just walks away without a care in the world.

Just realize how much the Pacers and PG make doing the USA Basketball. World exposure for both. Well, providing he was to play, but still the possibility was and is still there. Paul will get it next time.

.

Frank Vogel says "Killer instinct, start strong, build a lead and then step on their throats."

Re: IBJ: George injury will cost Pacers plenty of money

...which would have prevented nothing, except Herb would be making more money out of the deal.

The NBA can set up their own world cup with their own players, and there would be enough players to field about two teams outside of the US. Yay.

Again, Herb does not own Paul George. He's an employee doing what he's allowed to do under the terms of his contract. Herb is not entitled control over his entire life nor is he entitled to profit over every single thing he does.

Last edited by Kstat; 08-06-2014 at 05:30 PM.

It wasn't about being the team everyone loved, it was about beating the teams everyone else loved.

Yeah unfortunately the injury I'm sure killed 90% of the televised games the Pacers were going to have. I had them penciled in for a Christmas day game with the Bulls and now that's gone, plus just about every other game as well. I can only see there being 2 or 3 games on ESPN, maybe 1 on TNT. If they surprise people they may get more games as the season goes on much like last year.

"It's just unfortunate that we've been penalized so much this year and nothing has happened to the Pistons, the Palace or the city of Detroit," he said. "It's almost like it's always our fault. The league knows it. They should be ashamed of themselves to let the security be as lax as it is around here."

Re: IBJ: George injury will cost Pacers plenty of money

If Simon wants to sell out the Fieldhouse for every game, he's going to have to go into the luxury tax at some point. It's not going to happen without a luxury tax team.

Nonsense. I'd love it if our team spent a bit more on talent, but what we REALLY NEED...is a name. Someone like a Rondo, Dragic, Bledsoe. Someone who will build a ground-swell of excitement within the fan base and will sell out games. Lance was as close to that as we had. If we had managed to acquire Rondo, I think the excitement would still be there for this coming season. We need a name to constantly sell out BLF. Not necessarily a Lebron or Melo, but a Rondo or a Dragic would sell out a lot. A Klay Thompson or Kevin Love would as well. Not saying we have a shot or are even thinking about getting Love or Klay, but I am using both as examples. NAME'S sell out arenas. No PG (injury), and no Lance (free agency) will cause the ticket sales to take a BIG hit.

Re: IBJ: George injury will cost Pacers plenty of money

...which would have prevented nothing, except Herb would be making more money out of the deal.

The NBA can set up their own world cup with their own players, and there would be enough players to field about two teams outside of the US. Yay.

Again, Herb does not own Paul George. He's an employee doing what he's allowed to do under the terms of his contract. Herb is not entitled control over his entire life nor is he entitled to profit over every single thing he does.

Its funny people say this. Apparently the owners should be held to a different standard than the people they employ. I'll be thinking about this the next time one of these pampered divas decides they shouldn't be bound by a contract they signed as they pout their ways into the owners office to demand more money or a trade.

Re: IBJ: George injury will cost Pacers plenty of money

Its funny people say this. Apparently the owners should be held to a different standard than the people they employ. I'll be thinking about this the next time one of these pampered divas decides they shouldn't be bound by a contract they signed as they pout their ways into the owners office to demand more money or a trade.

You do that. It doesn't happen in basketball, unlike the NFL where it goes both ways. And when NBA players do request a trade, they do not refuse to honor their contracts. There is nothing at all wrong with asking to be traded.

Also, NBA contracts cannot be torn up and re-negotiated under the CBA (except in cases of a buyout), so you have no idea what you're talking about.

Last edited by Kstat; 08-07-2014 at 05:09 AM.

It wasn't about being the team everyone loved, it was about beating the teams everyone else loved.

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Re: IBJ: George injury will cost Pacers plenty of money

Having 1 losing season isn't going to lose the bandwagon/non-hardcore fans. And I think longterm, having a losing season isn't going to be bad. Should get a good player in the draft to couple with PG and build around those two. Then the following season West and Hibbs are done freeing up a lot of money.

I'm not saying tank the season. Pacers are already not good without PG and Lance. However, trying to get Marion and pushing for a playoff spot really isn't going to help the organization stay competitive, like championship competitive, in the long run.

Re: IBJ: George injury will cost Pacers plenty of money

Having 1 losing season isn't going to lose the bandwagon/non-hardcore fans.

While I agree with you mostly, I would add the caveat "for this reason".

Had we gone into the toilet completely with the only real change being Lance moving on, I think there would have been a pretty big stink about it. Most people would have been wait-and-see, except for the ones who loved Lance more than the team, but if it caused a complete collapse an awful lot of them would have "always" said that they knew losing Lance was going to screw things up.

However, when you lose your best guy to an injury like this, I think there's a bit of the whole "misery loves company" factor because it was not due to FO or player failings, just to bad luck. That - combined with the fact that most of the rest of the team is still pretty likeable, PD comments on Roy notwithstanding - means they will stick around for a season given any good reason to. Continuity helps that more than a fire sale, as does a team that fights hard against such adversity.

If there are major setbacks for Paul and this is more than just a "heal strong and rehab into his old self" situation, things may change.

BillS

A bird in the hand is worth two in the bush.
Or throw in a first-round pick and flip it for a max-level point guard...

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Re: IBJ: George injury will cost Pacers plenty of money

Only a resurgent Roy Hibbert can save this season now. He's the most recognizable player on the team now. If he takes the bull by the horns like Joakim Noah did last year (pun intended) and carries the team through the season, it would be a great feel-good story for Pacers fans and the NBA in general.

Larry is not coming back, he didn't have a meeting with Orlando for not reason, yeah he is coming back to the NBA but not to the Pacers, the notion that he is a taking a year off and then come back is absurd.

Re: IBJ: George injury will cost Pacers plenty of money

Only a resurgent Roy Hibbert can save this season now. He's the most recognizable player on the team now. If he takes the bull by the horns like Joakim Noah did last year (pun intended) and carries the team through the season, it would be a great feel-good story for Pacers fans and the NBA in general.

I think that ship has sailed... Roy is who he is. The only question will be when the slump comes and how long it will last.
I think our fortunes for better or worse rest on George Hill taking a large step with a larger role as a SG.

Nuntius was right. I was wrong. Frank Vogel has retained his job.

------

"A player who makes a team great is more valuable than a great player. Losing yourself in the group, for the good of the group, that’s teamwork."

Re: IBJ: George injury will cost Pacers plenty of money

Would you like it if your employer made it so you couldn't do anything semi-dangerous in your free time?

If I was on a guaranteed contract that said I got paid whether or not I showed up to work...wouldn't shock me to see that clause in there. In fact, I think a lot of these athletes have things like no motorcycle / ATV-types of language in their contracts. The only reason why playing for USAB is allowable is that it's really no different than an off-season training regimen.

It would not shock me in the slightest if Simon's attorneys have already hired experts to determine if the facility, USAB, and anyone that can possibly be named in a lawsuit is responsible for that injury. For the $8 figure plus loss he's expected to have, it's worth it. That's why everyone is pretty cautious right now in their statements about whether the positioning of the basket played a role in the injury. I guarantee the NBA does NOT want Simon to file a lawsuit. I also would bet every penny I have if Donald Sterling owned the Pacers that lawsuit would have been filed yesterday.